A utilitarian believes that the redistribution of income...

Name: Problem 3, Chapter 20: Principles of Microeconomics
Uploaded: 2019-07-08T18:47:57-08:00
Duration: 3 min 42 s
Channel: Megha Nayar
Description: A utilitarian believes that the redistribution of income from the rich to the poor is worthwhile as long as a. the worst-off members of society benefit from it. b. those contributing to the system are in favor of it. c. each person's income, after taxes and transfers, re- flects his marginal product. d. the distortionary effect on work incentives is not too large.

A utilitarian believes that the redistribution of income from the rich to the poor is worthwhile as long as a. the worst-off members of society benefit from it. b. those contributing to the system are in favor of it. c. each person's income, after taxes and transfers, re- flects his marginal product. d. the distortionary effect on work incentives is not too large.

A utilitarian believes that the redistribution of income
from the rich to the poor is worthwhile as long as
a. the worst-off members of society benefit from it.
b. those contributing to the system are in favor of it.
c. each person's income, after taxes and transfers, re-
flects his marginal product.
d. the distortionary effect on work incentives is not too
large.

Key Concepts

Distortionary Effects on Incentives

Distortionary effects on incentives refer to the negative impacts that taxation and transfers can have on individuals’ productivity and work effort. In the context of utilitarian evaluations, while redistribution may enhance overall welfare by increasing the marginal utility of income for the less well-off, it must be balanced against any potential reductions in economic efficiency due to decreased work incentives, ensuring that the net gain in utility remains positive.

Utilitarianism

Utilitarianism is an ethical and economic theory that suggests that actions and policies should be evaluated based on the overall happiness or welfare they produce. In public policy, this view entails that decisions are justified if they lead to the greatest overall benefit—even if that means redistributing resources—by maximizing total utility across society.

Income Redistribution

Income redistribution is an economic policy aimed at reallocating wealth from richer segments of society to poorer ones in order to reduce inequality and enhance overall welfare. This concept is frequently justified through a utilitarian lens by arguing that transfers from those with diminishing marginal utility of income to those for whom additional income has a greater impact will increase the total utility.

Transcript

00:01 Hi, everyone.

00:01 Today we're going to be solving problem three from chapter 20, which discusses utilitarianism.

00:07 And it asks us what a utilitarian would believe about the redistribution of income.

00:13 So to start off, we're going to define utilitarianism, which is the political philosophy that any government should choose policies that will maximize the total utility of everyone in a society.

00:25 And utilitarian define utility as the level of happiness of each person.

00:34 So part of the utilitarian approach is that the government should redistribute income to make income inequality less, and it rests on this idea of diminishing marginal utility.

00:46 So basically, utilitarians believe that if you have two people, one person who's earning $100 ,000 each year, and one person that's earning $20 ,000 each year, if you take away $1 from the richer person and you give it to the poor person, that $1 is going to mean a lot more to the poorer person versus taking it away from the rich person because the rich person has so much money that $1 is not going to hurt them that much, but for the poor person, $1 is going to help them more.

01:17 And so basically, this is the idea of diminishing marginal utility.

01:21 And because of this phenomenon, on utilitarians believe that there should be redistribution of income and a good amount of it.

01:29 However, they also believe that there should be a, there's a tipping point where redistribution of income should stop.

01:38 And this brings us back to our question.

01:42 So basically there is such a thing as too much redistribution for utilitarians.

01:47 They believe that, for example, the us has redistribution policies and they believe that sometimes, these policies can go too far.

01:55 So the u .s., for example, has two redistribution policies.

01:59 They have taxation, which basically means that as you get richer and richer, you're going to be taxed more and more...

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